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Add These 4 Top-Ranked Liquid Stocks For Healthy Gains
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Building a portfolio with stocks that have robust liquidity levels will likely work in favor of investors seeking healthy returns. Liquidity measures a company’s capability to meet its short-term debt obligations. Stocks with high liquidity levels have always been in demand, owing to their potential to provide maximum returns.
However, one should be careful about investing in a stock with a high liquidity level. High liquidity may also indicate that the company cannot utilize its assets competently.
Besides having sufficient cash, an investor might also consider a company’s capital deployment abilities before investing in the stock. A healthy company with favorable liquidity may be a profitable pick for one’s portfolio.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. The ratio gauges a company’s potential to meet short- and long-term debt obligations. A current ratio — also known as the working capital ratio — below 1 indicates that the company has more liabilities than assets. However, a high current ratio does not always suggest that the company is in good financial shape. It may also suggest that the firm failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike the current ratio, the quick ratio — also called the ‘acid-test ratio’ or the ‘quick assets ratio’ — reflects a company’s ability to pay short-term obligations. It considers inventory excluding the current assets relative to current liabilities. Like the current ratio, a quick ratio of more than 1 is desirable.
Cash Ratio: This is the most conservative ratio among the three, considering cash and cash equivalents and invested funds relative to current liabilities. It measures a company’s ability to meet current debt obligations using the most liquid assets. Though a cash ratio of more than 1 may suggest sound financials, a higher number may indicate inefficiency in cash utilization.
A ratio greater than 1 is always desirable but may not always represent a company’s financial condition.
Screening Parameters
To pick the best of the lot, we have added asset utilization — a widely-used measure of a company’s efficiency — as one of the screening criteria. Asset utilization is the ratio of total sales in the past 12 months to the last four-quarter average of total assets. Though this ratio varies across industries, companies with a ratio higher than their respective industries can be considered efficient.
To ensure that these liquid and efficient stocks have solid growth potential, we have added our proprietary Growth Style Score to the screen.
Current Ratio, Quick Ratio and Cash Ratio between 1 and 3 (While liquidity ratios greater than 1 are desirable, significantly high ratios may indicate inefficiency.)
Asset utilization greater than the industry average (Higher asset utilization than the industry average indicates a company’s efficiency.)
Growth Score less than or equal to B (Back-tested results show that stocks with a Growth Score of A or B when combined with a Zacks Rank #1 or 2 handily beat other stocks.)
These criteria have narrowed the universe of more than 7,700 stocks to only 7.
Here are four of the seven stocks that qualified for the screen:
Oxford Industries (OXM - Free Report) is an apparel company that designs, sources, markets and distributes products bearing the trademarks of its owned and licensed brands. Oxford's brands include Tommy Bahama, Johnny Was, Duck Head, Lilly Pulitzer, Southern Tide and The Beaufort Bonnet Company. The company granted licenses to select third parties to produce and sell certain product categories under its Lilly Pulitzer and Tommy Bahama brands. The Zacks Consensus Estimate for fiscal 2023 earnings is pegged at $10.48 per share, up 6.2% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 91.1%, on average.
Israel-based Perion Network (PERI - Free Report) is a technology company that offers online advertising and search monetization solutions to brands and publishers. The company is committed to providing data-driven execution, from high-impact ad formats to branded search and a unified social and mobile programmatic platform. The Zacks Consensus Estimate for its 2022 earnings is pegged at $2.00 per share, up 7% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 39.4%, on average.
Pure Storage (PSTG - Free Report) provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Pure Storage’s performance is driven by momentum in subscription services’ revenues and revenue growth in the domestic and international segments. Subscription services’ revenues benefit from the robust adoption of Evergreen subscription services and synergies from the Portworx acquisition. Strength in FlashArray and FlashBlade businesses and strong growth prospects in data-driven markets of Artificial Intelligence (AI) and machine learning (ML) bode well. The Zacks Consensus Estimate for fiscal 2023 earnings is pegged at $1.18 per share, up 24.2% in the past 60 days. PSTG has a Growth Score of A and a trailing four-quarter earnings surprise of 171.8%, on average.
Aerie Pharmaceuticals is a commercial-stage company focused on developing and commercializing eye disease therapies, including glaucoma and other eye diseases. Glaucoma is one of the largest segments in the global ophthalmic market. Aerie’s ophthalmology drugs, Rhopressa and Rocklatan, are gaining traction slowly and steadily. Their approval in additional geographies will aid overall sales. The company’s progress with the other ophthalmology candidates in its pipeline has been impressive so far and successful development of the same will boost its portfolio. Strategic buyouts bolstered the pipeline with promising candidates. Aerie’s retina programs continue to advance. The Zacks Consensus Estimate for 2022 bottom line is pegged at a loss of $1.82 per share, down by 1 cent in the past 60 days. AERI has a Growth Score of A and a trailing four-quarter earnings surprise of 70.3%, on average.
Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
The Research Wizard is a great place to begin and easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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Add These 4 Top-Ranked Liquid Stocks For Healthy Gains
Building a portfolio with stocks that have robust liquidity levels will likely work in favor of investors seeking healthy returns. Liquidity measures a company’s capability to meet its short-term debt obligations. Stocks with high liquidity levels have always been in demand, owing to their potential to provide maximum returns.
However, one should be careful about investing in a stock with a high liquidity level. High liquidity may also indicate that the company cannot utilize its assets competently.
Besides having sufficient cash, an investor might also consider a company’s capital deployment abilities before investing in the stock. A healthy company with favorable liquidity may be a profitable pick for one’s portfolio.
Measures to Identify Liquid Stocks
Current Ratio: It measures current assets relative to current liabilities. The ratio gauges a company’s potential to meet short- and long-term debt obligations. A current ratio — also known as the working capital ratio — below 1 indicates that the company has more liabilities than assets. However, a high current ratio does not always suggest that the company is in good financial shape. It may also suggest that the firm failed to utilize its assets significantly. Hence, a range of 1-3 is considered ideal.
Quick Ratio: Unlike the current ratio, the quick ratio — also called the ‘acid-test ratio’ or the ‘quick assets ratio’ — reflects a company’s ability to pay short-term obligations. It considers inventory excluding the current assets relative to current liabilities. Like the current ratio, a quick ratio of more than 1 is desirable.
Cash Ratio: This is the most conservative ratio among the three, considering cash and cash equivalents and invested funds relative to current liabilities. It measures a company’s ability to meet current debt obligations using the most liquid assets. Though a cash ratio of more than 1 may suggest sound financials, a higher number may indicate inefficiency in cash utilization.
A ratio greater than 1 is always desirable but may not always represent a company’s financial condition.
Screening Parameters
To pick the best of the lot, we have added asset utilization — a widely-used measure of a company’s efficiency — as one of the screening criteria. Asset utilization is the ratio of total sales in the past 12 months to the last four-quarter average of total assets. Though this ratio varies across industries, companies with a ratio higher than their respective industries can be considered efficient.
To ensure that these liquid and efficient stocks have solid growth potential, we have added our proprietary Growth Style Score to the screen.
Current Ratio, Quick Ratio and Cash Ratio between 1 and 3 (While liquidity ratios greater than 1 are desirable, significantly high ratios may indicate inefficiency.)
Asset utilization greater than the industry average (Higher asset utilization than the industry average indicates a company’s efficiency.)
Zacks Rank equal to #1 (Only Strong Buy-rated stocks can get through). You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Score less than or equal to B (Back-tested results show that stocks with a Growth Score of A or B when combined with a Zacks Rank #1 or 2 handily beat other stocks.)
These criteria have narrowed the universe of more than 7,700 stocks to only 7.
Here are four of the seven stocks that qualified for the screen:
Oxford Industries (OXM - Free Report) is an apparel company that designs, sources, markets and distributes products bearing the trademarks of its owned and licensed brands. Oxford's brands include Tommy Bahama, Johnny Was, Duck Head, Lilly Pulitzer, Southern Tide and The Beaufort Bonnet Company. The company granted licenses to select third parties to produce and sell certain product categories under its Lilly Pulitzer and Tommy Bahama brands. The Zacks Consensus Estimate for fiscal 2023 earnings is pegged at $10.48 per share, up 6.2% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 91.1%, on average.
Israel-based Perion Network (PERI - Free Report) is a technology company that offers online advertising and search monetization solutions to brands and publishers. The company is committed to providing data-driven execution, from high-impact ad formats to branded search and a unified social and mobile programmatic platform. The Zacks Consensus Estimate for its 2022 earnings is pegged at $2.00 per share, up 7% in the past 60 days. The company has a Growth Score of A and a trailing four-quarter earnings surprise of 39.4%, on average.
Pure Storage (PSTG - Free Report) provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Pure Storage’s performance is driven by momentum in subscription services’ revenues and revenue growth in the domestic and international segments. Subscription services’ revenues benefit from the robust adoption of Evergreen subscription services and synergies from the Portworx acquisition. Strength in FlashArray and FlashBlade businesses and strong growth prospects in data-driven markets of Artificial Intelligence (AI) and machine learning (ML) bode well. The Zacks Consensus Estimate for fiscal 2023 earnings is pegged at $1.18 per share, up 24.2% in the past 60 days. PSTG has a Growth Score of A and a trailing four-quarter earnings surprise of 171.8%, on average.
Aerie Pharmaceuticals is a commercial-stage company focused on developing and commercializing eye disease therapies, including glaucoma and other eye diseases. Glaucoma is one of the largest segments in the global ophthalmic market. Aerie’s ophthalmology drugs, Rhopressa and Rocklatan, are gaining traction slowly and steadily. Their approval in additional geographies will aid overall sales. The company’s progress with the other ophthalmology candidates in its pipeline has been impressive so far and successful development of the same will boost its portfolio. Strategic buyouts bolstered the pipeline with promising candidates. Aerie’s retina programs continue to advance. The Zacks Consensus Estimate for 2022 bottom line is pegged at a loss of $1.82 per share, down by 1 cent in the past 60 days. AERI has a Growth Score of A and a trailing four-quarter earnings surprise of 70.3%, on average.
Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
The Research Wizard is a great place to begin and easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.